My current views & strategy for everything

Disclaimer: by continuing to read you agree this is for entertainment purposes only; I am not qualified to give advice of any kind, so obviously that includes financial advice or helping with financial planning. I am a schizophrenic speculator that gambles for a living and sometimes, I write about what I’m betting on, and certainly, no one in their right mind should ever try to copy exactly what I do. In fact, I actually believe I’ll blow up (zero) my account before I achieve my goals of another ~100x, especially with the fact I no longer believe in free markets, due to the current Strait of Hormuz crisis. See, I’m as schizo as it gets.

To start, I’m super busy with AI at the moment. Hoping to submit one, if not two papers to a deadline later this month. Part of the reason I’m so focused on it is that I’d like to finish my PhD, and the rest of the reason is because I’m trying to ignore the manipulation in the oil market and bet on what I believe to be reality (Iran being unwilling to reopen the strait to its pre-war “freedom of navigation” status). As I’ve explained before, that has many implications, like Iran being OPEC now, as they are in a position of power where they can choose the export quotas of countries north of the Strait of Hormuz. It’s important to note this power position is temporary: it can only last if these neighboring countries don’t bury pipelines in the ground that circumvent the Strait.

The current rumoured deals are such that, should Iran sign, Iran effectively melts down all the leverage that they currently have permanently. The reason I say this is simple. Neighboring countries should learn a lesson here, and make contingency oil export plans via pipelines. That means if Iran closes the Strait in the future, it won’t make as big of a deal (unless Western countries don’t refill SPRs, but come on, of course they will).

So the point is, Iran has lost the ability to use the Strait of Hormuz as a weapon. This is it for them. They have to go big, or they quite literally lose their sovereignty. In fact, I believe they have to go so big that there’s only one winning outcome for them: they need to regime change the USA by keeping the Strait shut until 1 day after midterms. This would be a repeat of the Jimmy Carter Hostage Situation, where he was embarassed so badly by Iran (and made to look so helpless), that he lost his presidential re-election to Ronald Raegan.

Once the democrats sieze control of both the house & senate, in a crushing defeat for republicans, that’s pretty much it. Iran will have won. The Democrats aren’t going to let more of Trump’s war happen. Trump will also have to start battling never-ending impeachments, which he’s likely to get taken out of power by.

Theoretically: there is a deal they’d be willing to sign, but it would likely be one that makes Trump look so bad, that it would ensure he loses midterms. That means Iran keeps their enriched uranium, doesn’t dilute it, and Iran also gets paid a lot of USD (this USD is currently locked, but once unlocked, it will serve to boost “effective” M2). Iran also probably gets to charge tolls for the strait, permanently.

Again: why would Iran give up their current leverage. Normal people aren’t even aware of the situation because of refineries refusing to bid for oil (mentioned below under macro). Honestly, I think even Trump et al. aren’t fully aware how screwed the oil market is, because they’re successfully controlling sentiment so well (even my sentiment is “FUCK OIL” and I’m one of the most disciplined, unemotional investors alive. I have sat through brutal 70%+ drawdowns without even feeling it, and recovered everything + more!

I think Iran draw this out until midterms. The best way to say “never fuck with us again” is to have a history of regime changing the opposition, both times they fucked around and found out. The great irony is that this began with Trump wanting to regime change Iran! It’s funny how you tend to meet your greatest fear on the path you take to avoid it (Trump was likely manic after success in Venezuala, and wanted to cement himself as the big boy military regime changer of the world in order to home-run midterms; at least that’s my guess).

If my base case expectation, which is the Strait is opened the day after midterms, becomes reality, I expect oil to be over $150 for quite some time, more than long enough to benefit my oil producers.
If the Strait is opened tomorrow, I hold the following belief. Oil will have a floor price of $78-$80, due to countries

1. refilling SPRs

2. mandating increases to governmental SPR reserve sizes

3. and also mandating increases to the number of days of oil that refineries must store on hand demand

Australia has already done the above and I expect more countries will follow their lead soon.

The floor price above assumes Iran doesn’t close the Strait again post opening, but naturally, there’s a chance the Strait gets closed again if Iran feel the deal isn’t good for them (or Israel feels it’s not good for them, or the USA, or perhaps even countries like UAE / Saudi Arabia could start shit). The point is, there should be extra geopolitical risk baked into oil prices going forward, and that’s why I’m confident $78 is the floor.

To begin, ignoring the geopolitics here, we have a new emergent phenoma! See my post here to understand the previous two.

In addition to 1. Barnacles, 2. New SPR mandates & oil on hand increases mandated, we have 3. Refineries are choosing to draw down supplies they have on hand, instead of bidding to keep supplies in storage flat. This is happening globally, but it’s really happening strongly within Asian countries and some European.

This means we have an absolutely bonkers standoff because no one wants to pound the bid for physical oil. The reason they don’t want to buy is clear: what if a Trump deal drops and oil prices plummet? If we buy oil before that, we’d take a huge loss on crack spreads since our input costs would be locked in at high oil prices vs the current oil prices. Remember, cracks are how much refineries make when they buy, refine, and sell the oil products from a barrel of oil.

Thus, I present to you the macroeconomic situtation of physical oil in a meme below. I suggest listening with volume on, and if you’ve seen the movie, you should know why.

It’s cut before we get to the next part of the standoff. And that’s because that’s where we are, we’re about to enter the first stressful phase, where the refiners start looking at each other with sweat on their faces, but we’ve still got another few weeks before they start getting ready to draw their pistols and pound the bid at ask (causing price discovery).

Here’s the best part, as my subs that are crazy enough to have read my introduction to my computer science theory about self-avoiding random walks, this is the precise setup required for an emergent phenomena to trigger a black swan. This black swan would be black only for those who don’t hold oil, and that’s a pretty important distinction, and we will get into that in the next chapter.

Learn about self-avoiding random walks and extinction events below:

The thing is, this standoff of waiting to see who pounds the bid for physical oil fiirst, that’s the exact kind of thing that causes a “buy the news” event. You’ve probably heard of sell the news, which happened recently with my largest gold miner holding, Minera Alamos (now Mining Americas Corp). Basically, myself and others informed the market a bit too well (via weaponized autism) that the PFS for copperstone was going to be a huge beat. So a bunch of people bought the stock who aren’t genuine longs like myself, and they tried to sell the news, hoping for a quick trade. Now, Minera is down so much it’s ludicrous, and an obvious buy, but I digress.

The point is if they all try to buy the news, there will be a massive spike in demand for physical oil, and that will spike the oil price long before Kuwait and Iraq can un-shut-in their wells.

To summarize: the Asian refineries are cutting run-rates and drawing down storage (supplies they had on hand). The European refineries are doing the same. And this is because both sets of companies believe a Trump peace deal is close, which means “why should we buy oil now, when we can buy it next week after it crashes on news that Hormuz is open?”. This means that even if the strait opens tomorrow, they may all hit the bid simultaneously, causing, “counter-intuitively” an oil price rally on the “bearish” news.

Importantly: the “demand destruction” narrative will be proven false when this happens because consumption hasn’t gone down, everyone is just running supplies on hand stored in locally owned tanks. When they come to buy oil to replenish stocks on hand, there will likely be a surprise (in my schizophrenic world at least).

In summary: I am claiming, and I may be wrong, that the absence of price discovery can be explained by the above, combined with the USAs method of releasing SPR reserves (with a partial chunk of SPR barrels being funneled to Cushing to allow the treasury to manipulate the futures market as per my write up about Bessie Boy’s Algorithm).

See Bessie’s boys algorithm here:

When this standoff ends and the triggers are pulled, the price action will be a mushroom cloud to be remembered.

Here’s the recent API data:

This puts Cushing close to 20mil barrels currently stored, but depending on where tanks are in their maintenance cycle tank bottoms can probably be drawn down to 18million, to, in the best case, 15million, and the worst case just slightly under 20million.

I have no idea when it will happen, so I’m going to estimate 15mil barrels is when Cushing starts to have issues.

Since Trump is currently bombing Iran as I type this, I think it’s unlikely that this situation is resolved, and I expect Cushing will draw down at a conservative rate of around 500k barrels/week.

So the worst case is 10 weeks until huge problems.

The reason it’s hard to know what tank bottoms are is because the bottom contains sediment, and water, so… Who knows how much is in there!

I will keep this short. There’s a lot of rich people, and there’s a lot of rich funds, and a ton of people with political power, and all of them want the SpaceX, Anthropic, and OpenAI IPOs to go well.

Part of making these IPOs go well is keeping oil prices down. Oil is the blood of the modern economy. It keeps everything running, and with higher oil prices, it’s like the economy is dehydrated and the blood is thick. Suddenly, everything starts to go a little slower.

My belief is that we’ve had a lot of inflation, and oil can probably go over $140 without causing any real magnitude of demand destruction, but that’s not what the rich people believe.

Additionally, we have organizations like OPEC that have been brainwashed (somehow) to believe that if oil spends a few mere months above $120, everyone on the planet will switch to electric vehicles. Obviously, there’s not enough lithium for that, and we’re years away from hybrid lithium x sodium batteries being manufactured under an economy of scale boon for the technology.

For those that have read my article on self-avoiding random walks (which I can’t remember what I wrote within), I’ll just summarize my brain a bit here.

An extinction event within an evolutionary system is caused when everyone starts doing the same thing. Think about the refineries. They’re all cutting imports and choosing to run down storages, with the hope (and prayers) that oil prices crash in the near-future. That leads them toward their own death, because if they all decide to buy oil for delivery in the same week, there’s not enough tankers, and boom! You have the steepest backwardation in oil prices in history (you ain’t seen nothin’ yet).

Can you guess my point?

I warned everyone I’m a madman, multiple times in fact, so yes, I am perfectly comfortable telling almost everyone that they’re wrong — and if I’m wrong, I will be wiped out because I’m still in this and still using margin.

My belief here is simple. If everyone is hoping for the same thing, maybe they self-organize together and achieve it / pull it off. But Iran just downed an apache helicopter and Trump responded with more bombing of Iran. Come on!

The middle east (including Israel) is an awful place to live because the philosophy “an eye for an eye and a tooth for a tooth” is embedded within way too many people who are in power there. Iran will have to retaliate again now.

Don’t worry though, Trump will declare the ceasefire is still on, and oil stocks will stay down.

I think oil stays higher for longer, with a price floor of $78/barrel. I also think, that OPEC is a little bit correct, and that yes, these higher gasoline prices will boost EV demand, meaning that this oil bull market will likely cause a significant lithium bull market (which is already ongoing, but I think it will guarantee lithium prices stay higher for longer too).

Because of this, I started looking at lithium companies, and I found one called EMP Metals Corp EMPS.V (CAD), and I really like their set-up, under the guise of planning for a 2+ year long speculative investment, for reasons I’ll talk more about below. I was actually going to take place in their recent private placement, but I chose not to because of a surprise.

While looking into EMPS: I actually found a crazy, absolutely ludicrous way to play the oil and lithium bull markets simultaneously.

And we all know I’m insane, so yes, I jumped on it, and I’m now, I think, holding the highest risk portfolio I’ve ever held in my life. Please don’t copy me. You’ll see me living in a tent on the streets in a few years.

Another disclaimer: I make predictions about the future based on my life experiences and vibes below. If they’re wrong, well I was wrong and it’s your fault for trusting me: I am no oracle, just the local neighborhood schizophrenic.

Also: please don’t use margin, there’s too much damn volatility and fake news headlines. You have to leave a TON of buying power unused to survive, and the volatility is gut wrenching. Honestly, just never use debt to invest and live a happy life where you don’t live in fear of accidentally putting yourself into slavery if the market flash crashes.